LIAT, REDjet and Caribbean Airlines – Who Will Pay The Price?

Submitted by BarbadosFirst

George Hutson, Minister of International Business and International Transport.

It has just been told to me that Barbados Civil Aviation Authority granted permission for Caribbean Airlines to fly the Barbados/Guyana and Barbados/St Lucia routes – two of the most profitable routes for LIAT (in which Barbados is the majority shareholder). This is after giving REDjet the same license. The Barbados Government now wants to catspraddle LIAT which we got our taxpayers money invested in???? Is this a bargaining chip for a fishing agreement with Trinidad? Where is the Minister responsible for International Transport? We really need an answer on this one…

The region is too small for 3 airlines to be flying these routes!!!! Or is this a response to the strikes at LIAT. .All the same, I see a loss for the taxpayers of Barbados in LIAT

38 thoughts on “LIAT, REDjet and Caribbean Airlines – Who Will Pay The Price?


  1. LIAT ——— BED, the airline has been asleep for years, hopefully it won’t wake up and Barbados can cut it’s losses.


  2. Our media is amazing though, and lets keep the party politics out for a minute. The CBC evening news and barbados today are both carrying lead stories about woes in the cruise industry and inaction by the government. I am obviously concerned about this, but after reading and viewing the stories I have no idea what are the causes of the problems in the cruise sector and exactly what the sector would like the government to be doing that it is not doing.

    Please media, inform me properly about something nah.


    • @Businessman

      The issue is simple from the report. The BHTA President is concerned about the spiral in cruise ship numbers and the sloth in which the government is yet to respond:

      Here is the Barbados Today report.

      Cruise tourism in trouble

      Colin Jordan, President of the BHTA.

      The cruise tourism industry in Barbados was this afternoon reported to be facing a bleak future — at least over the next two years.

      President of the Barbados Hotel and Tourism Association, Colin Jordan, told its Fourth Quarterly General Meeting at Hilton Barbados that they were “amazed with the sloth that seems to characterise the approach of policy makers to the situation. We have a crisis on our hands and Nero, the system, seems to be fiddling quite contentedly”.

      Jordan disclosed that there had been a significant fall off in both cruise calls and cruise passenger arrivals.

      “It appears that the only real action being taken is private-sector driven. Now some in the public sector maintain that cruise, by its nature and size and infrastructural requirements, should be public-sector led,” he added.

      However, the BHTA president claimed that there was no leadership, at least none that can be discerned with the naked eye.

      Jordan said that even though Tourism Minister Richard Sealy was not responsible for International Transport, the association had requested him to facilitate a meeting in order to share their concerns and receive an update on the state of the industry.

      “We are now at a critical stage and need urgent attention and action,” declared Jordan.

      His Executive Vice-President, Sue Springer, also strengthened Jordan’s fears about the “shakey” position of the cruise sector.

      Springer revealed that while cruise arrivals increased by 8.5 per cent for the period January to September, only one ship would call at Barbados per week for summer 2012.

      She said there was a major concern regarding the forward bookings for 2012/2013 season.

      The BHTA Executive Vice-President stated that there would be a knock on effect for attractions, taxi drivers and retail business.

      “Princess Cruise line reduced calls from 55 in 2010/11 to 25 in 2012/13; Royal Caribbean is reducing calls from 86 in 2010/11 to 65 in 2012/13 and Costa Cruises was reducing calls from 15 in 2010/11 to two in 2012/13,” announced Springer.

      She disclosed that P&O Fly Cruise programme was expected to be reduced by 50 per cent in 2012/13. (EJ)


  3. But forgive me David, surely a response must be one that addesses one or more of the causes of the decline in summer cruise traffic. Maybe you guys and gals understand these things but all of us do not.

    The story tells me nothing about what the government has done or not done that is leading to this fall off, or what they can do that they are not doing that can address the fall off. And please lets keep the politics and antagonism which is such a feature of the blog out I just want to be educated on the matter. The story left me rather confused, it basically said cruise in trouble and government not doing anything?

    I mean I hear stories about airlines dropping routes for reasons of demand, costs and so on. I know we subsidise airlines to bring people hers is that what they are talking about. Are port fees too high, are there other issues that government can address. What?


  4. Tourism is our main sector and they seem to be asking for relief. I am sympathetic but many of this want relief too and this sector is already so heavily subsidized and has so many concessions. i mean I looked at the Tourism Act of 2002 and looked at some of the concessions:

    This sector is largely duty free and income tax free, and benefits from signficant state funded marketing.

    o Duty-free building materials and supplies for construction of a tourism property
    o Duty-free supplies for outfitting/refurbishment of a tourism property
    o 150% deductible on interest paid on loans for:
     upgrading an existing property
     Construction of a new property
     Construction of an inland property
     Purchase of 2 or more hotels that have 50 rooms or less
     Construction, upgrading, and refurbishment of a tourist attraction
     Expenditures on staff training
     Expenditures on marketing
     Expenditures on tourism product development/research
    o 20% tax credit on expenditures for improvements on wastewater disposal systems
    o Set-off against revenues of capital expenditures used for qualifying tourism project
    o 150% write-off of interest refinancing of loans

    I dunno can or should we give them more.


    • @Businessman, understand where you are coming from. Perhaps the objective of the report was simply to highlight the decline and the lack of a response from Hutson to a meeting to discuss the problem.

      @Hants

      There tourism players are quick to tell you it is their sector which carries Barbados on its back and that the market is changing all the time therefore our strategies as well.


  5. Business man I was attached to Marriotts Sam Lords later tranferred to London then Marriotts Miami until 15 years ago.
    I worked at Pegasus Jamaica and in Turks and Caicos.
    While on my stints abroad as a service professional I took a keen interest in Barbados tourist industry.
    What amazed me over the years is I never hear a Barbados hotelier say they had a good or great year.
    The Barbados Hotel Tourism Association is a body of complainers who blame government for whatever shortfall or difficulty that arises.
    To the layman the hoteliers lead you to believe they are at the door step of the poor house.
    Take the picture of hoteliers in Barbados Today of the panel at the Fourth Quarterly from which BU quotes.
    Bernie Weaterhed an extremely wealthy man.
    Gordon Seale an extremely wealthy man.
    Ralph Taylor a very welthy man.
    Jon Martineu, a manager without the wealth to compare to the others.

    The moral of the story is how is it the hotels according to the panel are forever tottering on the brink in need of tax relief and government assistance yet the majority of the owners and oprerators are handsomely rich.


  6. Businessman,

    What you forget is that Barbados is made up of a majority of SMALL hotels,
    in fact 120 of the roughly 160 registered properties are small.
    Many of us cannot access a lot of the concessions you quote because of the bureaucracy involved. Apart from the very rare duty free concession, this is one small hotel that has NOT received any Government handouts. But we are not complaining and nearly 30 per cent of our total annual revenue was paid to Government last year including $70,000 in corporation tax.
    There is currently and has not been for years any portion of the BTA massive budget ($92 million allocated for the last fiscal year) dedicated to promoting our small hotels despite the contribution they make. Look at the top 10 (or 15) in terms of customer satisfaction on TripAdvisor and you will notice they are ALL small hotels. Then look at some of our larger hotels and in some cases over 35 per cent of the TripAdvisor comments state they would NOT recommend the hotel.
    On the subject of the state of the cruise industry. What happened to the massive subsidy to Carnival Corporation, the world’s most profitable tourism entity? See Saturday Sun 7 October 2006. Initially a three year agreement to GUARANTEE 400,000 cruise passengers per year from the 12 brands of Carnival. I believe the Goverment ‘subsidy’ was $1.2 million. The agreement was renewed but when I asked recently at a meeting which included BTA management, no-one either knew or was willing to state if the agreement was still in force.


  7. @Adrian

    Some good points stated by you.

    Colin Jordan of the BHTA was fairly scathing in his remarks.

    How long will we allow LIAT to be the mess it continues to be?

    Now that resources are scare how will its debt burden be eased?

    More importantly we place pressure on T&T why they are not part of the CCJ. Why a similar focus is not placed on those Caribbean governments which benefit from LIAT but are refuse to be equity players?


  8. David,

    My own thoughts for a long time is there is NO future for LIAT in its present form unless they run it like a business. Perhaps the PM of St. Vincent is right when he called for its liquidation. Without the massive fuel subsidy CAL would also be a loss maker, so there is no level playing field.
    Competition has to be the answer and that is where REDjet is driving new business and rekindling Intra Caribbean travel.


  9. Good points being raised here and thanks for your comments Adrian. I take your point on the issue of small hotels, yet the majority of the lobbying seems to be on nehalf of some of the others.

    What are your views on the value for money of the types of subsidies to the cruise sector that you have mentioned.

    From my own reading since the story, the rise in fuel costs has blown apart the recent business model of teh cruise ships and they are not inclined to come this far south. Is some sort of subisdy to keep them coming value for money?

    What can and should be done to deal with the cruise issue and the small hotels.

    I am hearing calls for meetings and so on but no real background or context to the issues and what the state should be doing ? From my simplistic viewpoint if more is given to the sector in the form of subsidies then somewhere else in the society, some other sector may have to get less and those other places and sectors do not have the public profile, public stage and lobbying power of the BHTA.

    The lobby power of the financial sector in the USA and Europe is well documented.

    I am not that well educated but there are enough educated people around that these issues can be discussed in a less simplistic, black and white manner. The nation can devote a lot of time and attention to this issue of a letter, signed or not, but very little to some half decent analysis of a major issue.


    • Can anyone provide some perspective of the accommodation distribution in Barbados?

      In any season which hotels attract the tourist % i.e. small/boutique, medium, luxury etc.


    • @Businessman

      Don’t trivialize how integrity in journalism should be safeguarded.

      On 15 December 2011 10:56, David wrote:

      > Can anyone provide some perspective of the accommodation distribution in > Barbados? > > In any season which hotels attract the tourist % i.e. small/boutique, > medium, luxury etc. > >


  10. I think you have flagged an important point on integrity on this blog. I was commenting on hiow much time and effort the Nation newspaper has put into this letter story but very little into some backgrounnd on the accommodation or cruise sector for example.

    You David, i am a simple fella who likes knowledge. To me this stories they publish seem designed to generate emotional responses and ask you to take sides on the basis of very limited knowledge.

    What you get in our papers are really press releases from people with offices or credentials


  11. Business Man,

    I am not against the cruise ship subsidy as such, but it should be directed towards the eight long summer months and especially targeted towards home porting ships, so that there is an opportunity for pre/post overnight hotel accommodation and that it contibutes towards airlift.
    Personally I would like to see the smaller ships like Star Clipper, Silversea and Seabourne here during the summer months which would certainly help a cruise and stay programme directed at the South American (Brazilian) market.
    Ask the ancillery services and they will tell you that the single Carnival ship, Victory, does not produce much business and after being on it for a week, I fully understand why.
    It would really benefit some of our tourism planners if they followed are example and that way they would better understand the market.
    In terms of our small hotels, we have to upgrade and re-position most of them as experience boutique hotels.
    Last year I tried to get eight of them to join together to collectively produce a high quality, high definition video that could go on YouTube and be used as a marketing tool. The BTA London office was fuly behind the concept and would have helped towards the cost, but I could not get the hoteliers to agree.
    The new Atlantis and Little Good Harbour went ahead on their own and produced two stunning videos.


  12. David unravel this for us; Susan Springer of the Hotel Association reports tourism doom as 8 properties close doors (this year?) but the Association welcomed 21 new members (new properties?). WTF?!


  13. Passing thru,

    I think you will find that they are mostly NON hotel new members. ie: ancillery services (car rental, restaurants, activities etc.)
    32 hotels have closed in the last 18 years.


  14. David and Adrian, when I go to Trip Advisor and follow comments about barbados, the negative comments are almost invariably about the physical conditions of our hotels, the cost of barbados and the level of service, and in that order..

    From reading comments on trip advisor the vast majority of visitors like barbados but find a lot of the physical plant not up to scratch, especially in terms of the cost.

    I never hear the BHTA speak to that issue. they are our critical sector but they always seems to be setting the stage for more subsidies from the state.


    • @Businessman

      Part of the problem we have always sated is that the Barbados economy is public sector led and at its core are the construction and distributive sectors which are forex intensive and lacks creativity and diversification required to shift from being totally externally driven.


  15. but lobbies like the BHTA should not be allowed by us to totally shape the discussion the way they are currently allowed to. When you read Loveridge the lobby group actually seems to lobby for a particular segment of the sector only.

    It seems to me that like in the case International Business, a lot that needs to be done in the hotel sector needs to be done by the hotels themselves. I mean people on trip advisor are scathing about hotel website in Bim. They are scathing about the physical condtions at our leading hotels. Based on the reviews at trip advisor how can hotles allow their plant ot run down in this way. That is their responsibility. They are scathing about false advertising from hotels.

    We like we only have strength for public servants,politicians, Lime and Light and power.


  16. I am tired of the president of the BHTA. He seems to think that that sectore must get everything free and govt must do this and do that. I am really really becoming tired of him. Cut out some of the wastage in the hotel sector, like paying fx chefs so much money while local chefs receive inferior pay. What more can govt do. The hotel sector has a responsibility to ensure that its hotels survive they have to try to realize a return on investment and become competitive and off quality service.


  17. I have no problem with the president making his sector’s case. But to me we have to mark everybody hard. right now to me the private sector is getting off scot free ion this recession while the public sector and the administration are under a real microscope.

    Where are the ideas and innovations from the captains of industry?

    For all the noise Red Jet aint ready yet for me. If they now trying to make their mark and this is how they are, I wonder what they would be like when established.


  18. David, maybe I am just not getting it. I just read the Barbados Today Editorial and they are calling for action to address the “crisis” in the barbados hotel sector. The editorial seemed to be saying that the problem for the sector was its price level. The editorial did not what might be some of the actions that could be taken, by whom they could be taken and what might be some of the consequences of these actions. So for me again, I am left with a serious information deficit.

    Now for exampple, if we give the hotel sector the tax relief from the 17.5% VAT they seem to be asking for implicitly, what will be the consequences for our credit rating? Who is to pay for electricity and water subsidies which seem to be below the surface issues.
    We are already forgetting that this sector benefited from a TIRF early in the recession and the subsidy was not insignficant. Can we maintain gthe equivalent of a TIRF for a protracted period without bursting the public purse or seriously cutting other things.

    Again, I am aware because of my business that many of the problems at Almond, for example, are self inflicted. They have allowed the plant to become run down and this is clearly reflected on all the social media sites. They have had failed ventures in St. lucia and an acquisition program gone wrong. How many of these hotels have sought to take advantage of generous incentives in place since 2007 and expanded since and invest in alternative energy solutions?
    .

    A lot of these hoteliers are wealthy people and made a lot of money. Are we now to bail them out I have become very suspicious of these lobby groups since the recession. A lot of these are private businesses and we have never seen their books. In the USA and Europe we have private profits in the good times and public backstop for the losses in the slow down. To fund these bailouts governments then inflcit austerity on the people who did not make profits during the good time.

    My business will be affected by any slowdown in tourism. My investments in my website mean that I am fully booked for the upcoming season, and I am in no crisis. Little me has invested in alternative energy solutionn and you know what I have made it my business to wade through the bureaucratic issues and access whatever incentives are available,

    The media coverage and public discussion is too shallow and centred around headlines and finger pointing rather than detailed analysis of complex issues.


    • The tourism people see themselves as the goose that lays the golden egg -read forex.

      From this position there is the impression many feel entitled to bail out money.

      If we don’t wither Barbados?


  19. Yu see David why I keep stressing the complexity and choices is because I live them. The 2.5% increase in VAT hurt me because I am locked into a deal with the 15% VAT so I have had to absorb it, which is rough. But I also also borrow a piece of money at a floating interest rate. So any credit rating downgrade will likely increase my financing costs. So I read the S&P report and I feel if the VAT is reduced back and the government does not meet or exceed its targets there will be a downgrade and I will get hurt.

    You se for me I have to find that debt payment money every month come high or low so I don’t want that to go up. I feel i can more roll with the other things. So the thing is far from straight forward.

    For the people i do business with in Bim the physical state of the hotels is a big problem for them. They feel that they are paying big money for sub-standard properties. The fellas have not kept up their properties and many guests feel they are not up to the standard for the prices quoted. That for me is at the businessman not government. You have to upkeep that plant, and to me even places that make good money have failed to do so.

    The other thing is the business itself David. The internet and the smart phones have totally changed the business and the players in the sector have been left behind. No government agency with civil servants at a desk can respond to these trends. People on the ground, in the bsuiness, have to be nimble. We are asking a lot of the policymakers while we in the business are asleep at the wheel.

    The visitors want to do most things online or on their smart phones and most of our hotels don’t have a half decent website. That is not about government, yu have to keep up with your business. I would do more business or at least have more satisfied customers and better word of motuh if people could reserve my services and pay on their smart phones. thats how they operate now, and i am trying to learn and see how I can adjust my business model to suit. My customers curse about being unable to check reservations and travel schedules from their phones.

    the Rihanna thing working for me. yu have to try to create a buzz around your product, your hotel, whatever you are selling and it needs a serious online presence and sophistication.

    People quarrel about barbados price, but what they seem to be saying to me is that the bigger issue is what they are getting for the price, and a lot of that is about us in the sector, especially the hotel sector..


  20. We have a lot of calls for tough choices to be made and this is one. To me a lot of fellas in the hotel sector rode on the good name of barbados and past reputation to extract high rates for poorly kept properties. The recession and the sheer age and poor condition of much of the plant has come home to roost. The majority of problems in the sector are about the global recession, thye poor state of many of our properties and the failure of our hoteliers to respond to the dramatic changes in the industry in the last four or five years.

    How many people in the business have a link to Trip advisor or make serious use of face book. These two sites just have amazing influence on travellers now. You can do virtually nothing in the barbados hospitality sector on your smart phone.

    Should we not do what many of these same hoteliers are calling for with four seasons and let the market decide? Should these entrepreneurs who have neglected their businesses now be rewarded with more public money and subsidies? I think not. I think the sector will emerge stronger if we allow a shakeoput of some of these poor players. We cannot and should not continue to subsidize ineffective and poor managers.


  21. The BHTA needs to deal with the sloth among its members in responding to the new enviroment for the travel and tourism business and keeping up their properties.


  22. George Hutson needs to free up the caribbean air travel to REDjet and CAL and stop protecting LIAT. Barbados will benefit from increased travel within the region. Right now many caribbean persons would like to see their neighbours’ country, but the airfare is so high and comparable to ftying to USA, that we are losing on a lucrative tourist market right under our noise, while looking to perswede persons from thousand of miles away to come here, especially in a recession. hotels need to offer special Caricom rates, just above or similar to staycation rates to encourage region travel.


  23. Interesting to listen to comments by Ralph Taylor and Jon Martineau in the news this morning. Martineau is of the view hotelier should carve a niche based on its product and go for it without looking for government handouts. Taylor opines that Barbados tourist product has not changed in the last 20 yrs which obviously straddles governments. Interesting the respective comments, Accra is successful and Almond in the dumps.


  24. I rest my case David. The Accra has a business strategy and is pro-active, many other hotels don’t have a strategy and are passive players.

    Who is supposed to reform the tourism product besides the players themselves. They are best placed and have the best incentives. Thats how business is supposed to work.


    • @business man

      To sum it all up which captures some of your earlier points, Taylor is a millionaire several times over and the plant at the hotel he manages is decaying.


  25. @ Business Man
    “The BHTA needs to deal with the sloth among its members in responding to the new enviroment for the travel and tourism business and keeping up their properties.”
    “We cannot and should not continue to subsidize ineffective and poor managers.”
    “People quarrel about barbados price, but what they seem to be saying to me is that the bigger issue is what they are getting for the price, and a lot of that is about us in the sector, especially the hotel sector.”

    These are just three extracts of a very powerful set of contributions that, I must admit, I am in total agreement with you on. We cannot have this type of “parasitic, gimme gimme” approach to a mature industry.
    The players ought to be more creative and proactive given the new paradigm of tourism marketing.

    But you should also be prepared to accept a similar shift in the composition and outlook of the public sector regarding its role in this new facilitating and supporting function. The private sector can no longer afford a public sector that refuses to accept the winds of change and adapt accordingly.
    No thriving private sector means no viable public sector. Interesting times ahead for this symbiotic relationship!

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